According to the Reserve Bank of Australia, the Forex turnover of all currencies in the Australian market averaged $170 Bn per day in 2007, with an increase of 66% since the previous BIS Triennial Survey. The growth in global turnover during the same period was 71%, and this indicates how big the Forex industry is in Australia and paints a picture of its popularity.
One needs to set up a trading account to earn money by trading on Forex platforms. Hence, most trading platforms and brokers offer a wide range of trading accounts, each of which caters to specific audiences and solve unique and specific problems. And if you want to start forex trading in Australia for beginners, this article lists some of the most common types of trading accounts people use to conduct forex trading.
- Standard Trading Account
A standard trading account was the most popular trading account at one time since, often, it had a fixed spread. And despite being a classic, it is no longer as popular as it used to be.
Advantages
- Higher quote accuracy.
- High leverage.
- Low minimum deposit.
- No requotes.
Disadvantages
- Several delays in executions.
- High spreads.
- No accumulative annual rates.
- Demo Accounts
Such accounts are primarily used to learn and practice trading on Forex markets. Such accounts work in the same manner as most standard accounts, but instead, they use virtual money to trade and hence have no risks or rewards involved.
Advantages
- No risks.
- No emotional pressure or stress on the trader.
- Full access to trading instruments.
- No restrictions on the duration of the positions.
- Ideal for learning and testing out strategies.
Disadvantages
- No profits or rewards are to be gained.
- Mini and Micro Accounts
Mini and micro-trading accounts are special trading accounts that utilise deposits that are often reduced by 10 or 100 times under standard conditions. With such prevailing factors, often trading lots cost 10000 or 1000 instead of 100,000 and are hence called mini and micro-lots, respectively.
Advantages
- Best suited to test a broker’s conditions.
- The risks involved are minimised.
- Helps users get accustomed to the platform.
Disadvantages
- Not suited for short-term trades.
- It may involve delays in the execution of orders.
- Orders are executed last by the broker.
- ECN Accounts
As of now, these accounts are the most popular trading accounts that cover the needs of most types of traders. These accounts are the first choices of most professional traders and traders seeking to execute their orders with perfect accuracy. Meanwhile, it is recommended to use such accounts only with a minimum deposit of at least $500 to get started on them.
Advantages
- Instant order executions.
- Entry to the interbank market.
- Suiter for scalping.
- Best quotation accuracy.
Disadvantages
- The slippage possibility is high.
- As the volatility increases, the spread may widen too.
- PAMM Accounts
Such accounts are designed for those traders who don’t have sufficient time or knowledge to trade and are mainly means of investing their money. These accounts work by entrusting the accounts to professionals on behalf of the investors. These professionals do not have rights over the distribution of profits; the account is only synced with the professional’s trading account and their proceeds.
Advantages
- The trade managers do all the work.
- Only the investor has access to the money in the account.
- Can work on mini-accounts as well.
- The risks are limited only to the amount transferred to the PAMM account.
Disadvantages
- Money on the account is normally inaccessible to the investor, often for long durations.
- Investors do not learn the process of trading.
Depending on the needs and expertise one possesses, there are various types of accounts, each suited and catering to specific audiences. As such, the traders have full freedom to choose what and how they wish to trade as per their liking. Various brokers and platforms for forex trading in Australia for beginners support such accounts and provide full access to their tools and services. So, if one can decide their purpose, the amounts they can trade with and realise their risk appetites, anyone can see what account type is ideal for them.